CIP-126: Updates to CityDAO Governance - “6 Months In”

Proposals (CIPs)
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Following the Pol.is exercise initially shared here (results here), Scott, Josh and Konrad have thoroughly reviewed the Operating Agreement to make a improvements that we believe will help CityDAO more smoothly.

This CIP will need to pass a hurdle of 1000 Citizen NFT votes to hit quorum as it is making changes to the Operating Agreement which has escalating requirements over time. That is more than any of the last 10 CIPs and so if we build alignment behind the concepts we will be doing a communications push to engage citizens to vote.

As such, please take some time to read through the changes and provide any constructive feedback that you may have.

Key Updates:

  1. Overall cleanup and combination of Operating Agreement with key Charter concepts into one “source of truth” document for the DAO (definitions, codification of procedures in use, etc.)

  2. Specifically - Adding CIP, Quorum, and Voting to the Operating Agreement

  3. Multi-Sig Updates:

    ⅔ majority vote may be used to change a member of the multisig if they have not signed a transaction in 3 months or have not been available generally

    Members should be US Citizens; willing to be KYC’d

    Transactions require 5 of 8 signer approval

    Signers to be confirmed - one year term(s)

  4. Institution of an good governance committee whose sole purpose is to ensure the CIP process integrity and core DAO service maintenance. Over time the operating committee will automate as much/as quickly as possible. The powers of this committee include:

  • Ability to spend funds only as required to fulfill its purpose of maintaining the CIP process, core DAO services, and automation of both of these.

  • Block CIPs that would be illegal in relevant jurisdictions that CityDAO operates.

  • Waive CIP like and time period requirements if necessary for the operation of the DAO as Mission guild currently is able to.

Quorum as follows:

Monetary:

100 wallets for proposals under $10k

200 wallets for $10k USD - $499,999 USD

400 wallets for over $500k

Non-Monetary:

if OA amendment/modification not required: 100 wallets

if OA amendment/modification required: 250 wallets

Quorum may be adjustable on a quarterly basis by examining the average voter turnout rates for CIPs and Snapshot Elections in the prior ninety (90) days - if desired

Voting & Quorum on CIPs: one wallet = one vote until the the DAO can implement an effective system for one person = one vote

The proposed operating agreement (Links):

  1. Redline version.
  2. Complete version.
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Thank you for leading the effort to improve our governance, huge shoutouts to @kkopczyn and @DAOvolution.

I think this will be a big improvement for the DAO:

  • Reduces legal risk for Citizens by clarifying mistakes and unclear wording in the old operating agreement
  • Shifts from token weighted voting to one-wallet-one-vote, making CityDAO more democratic.
  • Makes it easier to change the Operating Agreement going forward, making it possible to improve our governance
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I haven’t reviewed it in detail, but my initial thought is that we have not had much success with ‘terms.’ I.e. there’s not enough folks who meet qualifications who are engaged enough to have a rotation of folks. Also, when dealing with money I think we should err on the side of people who have had experience in the community and a relationship here rather than just rotate to feel good about giving other folks a chance. If we have trustworthy people and they haven’t done anything wrong I don’t see a reason to change just to have a term. The selection and election becomes a huge hassle.

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Agreed, the way its written is not that people need to be changed, but rather that they just need to be re-confirmed every 12 months. We can try to make that language clearer.

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Hi guys - thanks for all your effort on this. It’s much needed. Very much appreciate the depth of the work as well.

My thoughts:

I’m having trouble with the idea of the Good Governance Committee, and this sentence in particular: “In addition, the Good Governance Committee shall have the power to delegate tasks to any employee, Citizen, or agent of the DAO, including authorizations for signing purposes in furtherance of the DAO’s activities, and further may reasonably use and control the DAO’s resources, including without limitation the DAO’s Treasury and bank account(s) and the DAO’s social media accounts, Discord Server, Forum page, webmail, and so on to accomplish such tasks.”

Could you help me understand the intent? It reads to me like treasury signers get to appoint a 3-5 person “CEO” that can do whatever they want with the DAO’s money, and unilaterally compel Citizens and employees to do things for the DAO. Am I missing something? (not a rhetorical question, genuinely wondering if there are other sections that limit the powers of this Committee)

I understand engagement is low and thus some of our democratic processes have been arduous, but this feels like straight up centralizing CityDAO. My suggestion would be to take delegation out of the equation and put a low limit on what this Committee can do financially without a vote. In terms of blocking CIPs for legal reasons, on who’s authority do those decisions rest?

An adjacent question is, upon amending this OA, are we holding an election for the multisig? Or just affirming the current members?

I’d like to see, upon passing this OA amendment, a true round of elections for the multisig… candidate pitches, debates, and all. If a lot of the DAO is going to be centralized around the multisig signer station, it’s only fair to hold open elections on the first go-round.

@kkopczyn I’d request that you more completely summarize the whole Good Governance Committee section in your breakdown, including the powers being suggested, so Citizens can comment, as I doubt most ppl are going to go through this OA redline page by page.

Regarding section 9.05, I don’t love the idea that the Good Governance Committee can waive the 20-like requirement and / or the forum comment period. That allows a select few people to push whatever they want, whenever they want to Snapshot, thereby having massive influence over the direction of the DAO, the projects it takes on, etc, compared with other Citizens. The limitation placed on this power–“…is necessary for proper and timely operation of the DAO”–is pretty open to interpretation.

Section 9.06 - Can the “pass” threshold be “greater than 50%” as opposed to “51%,” the latter of which does not account for really close votes?

Thanks again guys.

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Just commenting that these are great questions, I’ll respond in depth later.

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Appreciate the tedious work of doing this. A couple of broad points more just meant as food for thought. I was not part of writing the original OA, so I don’t want to weigh in on the more tedious details.

  • This is beating a dead horse, so I apologize in advance, but a move to 1 wallet = 1 vote increases the incentive to move NFTs to different wallets. My thought going months back is that the logical solution is to keep 1 NFT = 1 vote until we get a proof of identity type mechanism, then move to QV. I know people want equality in voting, which is admirable, but I hate doing it in a way that rewards those who act unethically and move NFTs across wallets.

  • Having discrete jumps to Quarum is an outdated norm. Why not just use a continuous equation? Quorum > y + ($ amount funded)/x where x and y are just some number to be determined. I mean, this is just fitting a line through the points. Web3 should be high-tech. I know it seems silly, but with things like this, you suddenly get proposals for 9,999$, and 499,999$. Just figure out what you want, put it into the equation and see what quorum is needed. No incentive to adjust the amount to game quorum. It seems a bit silly that a 10 k proposal and one that asks for 500k minus a dollar, so 50x as much, would require the same quorum.

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My original idea for quorum that was shut down a long time ago, and presents some obvious problems as the treasury decreases in value, was to make quorum = X and solve for the equation of (budget requested / total treasury = x / total number of citizens) and then simply solve for X algebraically to arrive at quorum. One variation would be to count active citizens over the last 90 days instead of total citizens since a lot of people are not actively participating. Thus it could be truly algorithmic (but obviously would still face some challenges).

In discussions the team viewed one wallet = one vote as the best middle ground until CityDAO can get to proof of humanity / one person = one vote. Also in theory, the same sybil incentives exist as before, only perhaps stronger now that vote weight would not matter. Its not without issues but something that could help make the outcomes of voting more democratic (hopefully).

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Interesting, I guess “great minds think alike” :slight_smile: . Make a lot of sense to me, but I am sure there are some valid reasons not to make it into an equation. But I am on board with you.

Regarding the one wallet = one vote. Totally bottom line is until we get proof of humanity, we are trading one set of downsides for another. No easy answer.

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  1. Re powers of the good governance committee and "It reads to me like treasury signers get to appoint a 3-5 person “CEO” that can do whatever they want with the DAO’s money, and unilaterally compel Citizens and employees to do things for the DAO. " This is formalizing something that already exists through a variety of mechanisms some as what I’ve heard referenced as powers of the mission guild and some just happening through necessity.
  • For example, there has never been a CIP to pay CityDAOs general counsel nor to pay taxes CityDAO owes, and yet those expenses get paid out. This formalizes power of the signers to make such “necessary for doing business” spend without having to go through the CIP process each time. At the end of the day, the multisig can and has been doing this without explicit CIP power and so this formalizes this.

  1. “In terms of blocking CIPs for legal reasons, on who’s authority do those decisions rest?” Its the multisig vote.

  2. “I understand engagement is low and thus some of our democratic processes have been arduous, but this feels like straight up centralizing CityDAO.” I would argue that

  • A, CityDAO isn’t very democratic right now. It’s basically a system where those people that spend the most time typing on discord or the forum and have time to sit on calls all day are the ones that are able to make decisions. Hopefully the formalization of this process will allow more people to know how to participate by making the process more clear.
  • B. I think its a good thing to centralize control over the governance of CityDAO while decentralizing the actual work through a project focus and letting the projects be entirely independent in decision making as long as there is clear benefit back to CityDAO.
  • C. To reiterate, the intent is not that the signers can just do whatever they want but rather that the signers can maintain the proper functioning of the DAO operations without requiring a vote. There is a judgement call involved here for sure but thats the nature of legal documents, they’re not always as specific as code but rather up for interpretation of the people operating through them. This also gives those people flexibility to operate effectively.

  1. “In terms of blocking CIPs for legal reasons, on who’s authority do those decisions rest?” ← its a vote of the signers.

  2. “I’d like to see, upon passing this OA amendment, a true round of elections for the multisig… candidate pitches, debates, and all. If a lot of the DAO is going to be centralized around the multisig signer station, it’s only fair to hold open elections on the first go-round.” I’m open to how this is to be done, it will need to go through CIP.

  3. " I don’t love the idea that the Good Governance Committee can waive the 20-like requirement and / or the forum comment period. " ← this is currently a power that mission guild has.

  4. “Section 9.06 - Can the “pass” threshold be “greater than 50%” as opposed to “51%,” the latter of which does not account for really close votes?” Yes

I will update the section of the summary to account for the above.

@DAOvolution I would be curious on your thoughts on any of the above.

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We could make it an equation, and probably should in the future, my thought is that its simpler for now (since we’re making a bunch of changes) to stick to clear thresholds and then we can use the power to change the quorum later to adjust it.

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Thanks Konrad.

In terms of formalizing the powers of the Mission Guild, if I remember correctly it takes 10 of 13 votes to do things like waive the 20 likes. This is very hard to achieve (I see that as a good thing). You’re talking about concentrating this power in as few as 3 people. It’s a huge difference. What if you did away with the committee idea and these centralized powers simply needed a majority of the multisig signers to pass?

In terms of truly limiting central powers to core DAO functions - what language can we incorporate to make this clearer and more specific? And can we put a strict limit on the amount of money that can be spent by the signers unilaterally but for a few specific expenditure types (like paying taxes)?

I guess at the end of the day, what continues to draw me to CityDAO is thinking harder than most DAOs about governance, how we can push the edges of democratic and algorithmic mechanisms. Centralizing governance defeats the purpose for me, and I think for a lot of other folks.

So from my POV it’s important to strongly delineate what needs to be done to keep things running day-to-day, and all the rest…

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Not to steal Konrad’s thunder or weigh in out of turn, but majority multisig makes sense too - the idea was that the governance committee would be multisig signers so it had some of that flavor already, though 3 is obviously less than a majority of 8 (5).

As for any authority/power - agreed it can be spelled out much better. The idea is that things should be reasonably related to the operation of the DAO but even that term raises ambiguity so I for one see your point. That said - to me the balance is between “decentralization” and “getting stuff done” - sadly they seem to be opposed. However there is no doubt that we can make improvements to the operative legalese.

Last I’ll just end with my opinion that it is far worse for CityDAO not to update the OA/Charter. These edits are not perfect but appear to be improvements to me, and still, anything objectionable is modifiable - either as part of this exercise or through later modifications to the OA, which (following this update should be easier to accomplish). I wont say these edits were the perfect edits, but I do see them as an improvement, and am still hopeful people can suggest specific items for updating instead of not engaging productively.

To that point - I asked people to come to calls that I hosted for weeks starting over two months ago… I insisted that the OA contain more people’s input than just the “planning committee”… thus basically I forced Konrad to go out and solicit feedback (maybe I am taking credit for the forced part but I did sort of force it in the name of participation and arriving at a result that reflected popular opinion) - all of these steps were designed to engage the community and get positive contributions leading to a better outcome for governance. No one other than Konrad and Aaron showed up for the calls as could have been expected. (Will weighed in separately) The pol.is participation was like pulling teeth. We have had the charter for 6 months and every facilitator is aware that it said all sorts of aspirational and unenforced language… What are the things you want to see specifically added/edited @gugz ? I say we work through it together.

This draft is written in pencil, not pen, so we can update it! Doing nothing and patting ourselves on the back in regards to the original OA and charter is absolutely the worst case outcome of this exercise however. I am hoping people who worked on the original charter are not being blinded by ego. The only thing that matters - that truly matters for this exercise - is getting the paper to agree with current practices and at a baseline we know that is simply not the case anymore.

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Josh and Konrad are the right people to be leading this initiative and you both have my support.

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“I guess at the end of the day, what continues to draw me to CityDAO is thinking harder than most DAOs about governance, how we can push the edges of democratic and algorithmic mechanisms. Centralizing governance defeats the purpose for me, and I think for a lot of other folks.”

2 general comments about this paragraph:

  1. we did specify that as much as possible would be automated/algorithmically managed, as soon as possible

  2. who are these other people you talk to and why has no one reached out directly to konrad or me? From where I am sitting, tbh almost everyone who has stuck it out with CityDAO this long agrees that getting things done is most important and also recognizes that having an agile method of doing so best enables future success… not trying to nitpick but I think we all agree that people getting things done is good for the DAO, not bad!

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First, as an overarching comment, I think that @DAOvolution and @kkopczyn did a lot of excellent work here and I highly appreciate their time and commitment to this ongoing project. I am also very hopeful at the positive overall nature of the comments on this forum post and note the spirit of collaboration. Having said that, I, too, have some concerns about what has been discussed above.

First, in terms of quorum, since that was one of the main issues that led to the rewriting of the OA, just so it is clear, the OA would now have three categories of entities, which is to say a “member”, a “person” and a “citizen”.

A “Member” is any “Person” in lawful control of a Citizen NFT. However, in Sec. 4.01 it clarifies that members are not “legal members” of CityDAO, LLC. I do not see the term “legal member” defined in the OA, so I’m not sure who is a legal member of CityDAO LLC.

A “Person” is quite broad, and could include an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; decentralized autonomous organization; or any other legal or commercial entity.

A “Citizen” is any wallet in control of an NFT (so it doesn’t matter who own the wallet). A citizen is not a “person” or a “member” but rather a wallet.

“Quorum” is the number of “Citizens” (or wallets) required to participate in a vote for such a vote to be valid.

As is noted in the comments above, this means that people can still use sybil attacks by creating a large number of wallets (though I understand that there’s little we can do about that until there is proof of humanity, as mentioned in Sec. 9.06). However, it does beg the question of why we are moving from a pure NFT count to a wallet count, when the system can still be easily gamed. Why not just continue with an NFT count? Also, I didn’t notice this OA clarify whether CityDAO will still use the quadratic (which is to say square root) method that is currently in place.

In terms of quorum levels, I agree with comments made above by @ScottA that with our level of tech, we might be able to come up with an algorithmic method to establish quorum levels that is superior to a single range of $10K - $500K which, as he pointed out, will likely lead to CIPs for $9999 or $499,999 just to easily game the system.

At the very least, it seems like there could be more intermediary levels between $10K and $500K. I think a more reasonable range might be:

0 - $10K = 50 wallets
$10K - $50K = 75 wallets
$50K - $200K = 100 wallets
$200K - $300K = 200 wallets
$300K - $400K = 300 wallets
$400k - $500K = 400 wallets
And above that, 500 wallets.

Just a suggestion.

In Sec. 2.05, it is stated that “citizens” (which is to say a wallet, according to the definitions, “should be aware that they bear certain risks involved in becoming a Citizen. Citizens also bear the risks involved with holding any Citizen NFT, if any, for as long as they hold a Citizen NFT.” My question is, aside from the value of the NFT dropping to zero, what risk could a wallet possibly bear? Especially as it’s not a person or a member that bears the risk, but a “citizen”?

In Sec. 2.06, it says that “Authorized Citizens” may require Citizens to provide certain
information to establish identity. In Sec. 7.02, which appears to be about indemnity, it defines an “authorized citizen” as “Citizens exercising their Governance Rights”. So does this mean that any wallet (again, “citizen” being defined as wallet) that is voting (exercising governing rights) is an “authorized citizen” and can demand that other wallets provide information to establish their identity (dox)? How could an authorized citizen make such a demand? What happens if someone refuses to comply with the demand? Couldn’t this lead to everyone who votes demanding that other citizens be doxxed? While a citizen may withdraw or dissociate from the DAO according to Sec. 10.02, the OA makes no mention (that I saw) of blocking any specific citizen (wallet via their ETH address) from voting.

In Sec. 6.04(b), it states that the main multisig signers must be confirmed via CIP. Will a new CIP be created so the community can vote on them? Can anyone “run” for the position of main multisig signer? This echoes @gugz’s comments above calling for the possibility of a DAO-wide election for signers. My only comment to that would be that it may be reasonable to have limitations on who may run. This may be similar to my next comment, which asks whether it must be U.S. Citizens who run for this position.

In Sec. 6.04(b) it says that all multisig signers must be U.S. Citizens, currently residing in the U.S., and must be willing to be KYC’d. Why are these geographic requirements in place, and where will the KYC information be kept? With finance guild, or with outside counsel (or another place)?

In Sec. 6.04(c) it says that multisig signers are “reasonably compensated for their time”. Who gets the choose the compensation and by what standard is it considered reasonable? Is it by the same CIP that confirms who is on the multisig? If a member, person or citizen wants to appeal this, is there a mechanism, or would they need to create a new CIP suggesting that multisig signers are being overly compensated?

In Sec. 6.04(b), if the multi-sig signers appoint the “Good Governance Committee” of 3-5 of their own members, how are these two groups any sort of check on each other’s power? If the Good Governance Committee can “ensure” that CIPs meet minimum requirements, does this give them the power to veto any CIP they choose, on the basis that it doesn’t meet requirements? How can a Member, Person or Citizen appeal the committee’s decision? This echoes comments above that giving this level of authority to 3 people creates the possibility for oligarchic control.

According to Sec. 9.05, all CIPs must be submitted using a template created by the “Good Governance Committee”. Why can’t someone write a CIP in a way that is meaningful, easy to understand and readable but doesn’t follow a committee’s requirements? What if the committee chooses to make restrictions that hamper the ability of members to create CIPs? This seems like an unnecessary requirement, though a reasonable request. Similar to my point above.

There are no provisions in the OA about removing members, people or citizens from discord or banning them. Who has this authority, and would this be mentioned in the OA, or would this remain in the City Charter?

Thus, my final question is whether this OA completely removes or invalidates the CityDAO City Charter. I see no mention of the Charter in the OA. Once this OA passes, is there room for some kind of aspirational document that still discusses things like guilds, goals, missions, values, etc.? Sec. 3.05 discusses the “purpose” of the DAO, but the Charter goes deeping into the values and missions.

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50%+1 is what we want. The delta between 50% and 51% in a 10,000 vote pool is 100 votes so it’s a pretty big difference - and probably unintended.

The phrase that is giving me pause is “delegate tasks” which is unrealistic and we have zero recourse for noncompliance - whereas voluntary compliance doesn’t need a clause - so some clarification of the intent here would be helpful. it might even be helpful to make this kind of a whereas clause or “intent statement” instead of an actual policy.

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I am in the process of formulating a more substantive response to both @gugz and @Da3vid’s comments, but the “50%” comments are indicating that you all have not read or are not familiar with the existing versions of the documents that you helped create and signed off on.

I do not intend this to be a poke or negative comment toward any of you here, just something I am noticing per the feedback that has been received thus far. (Some of the definition questions from @Da3vid for example - some are hold-over definitions from current OA/Charter… I am more than happy to work through it all of these issues… but just wanting to be clear that a lot of these things were already written and/or wrong in the current versions - hence the need for the current cleanup exercise)

Check the current documents… they say 60%… that’s right… 60%. Making it 51% was an attempt to revert to simple majority, but yes, we can make it 50% + 1 vote :slight_smile:

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Not a bad idea but i just am at the point where we should be overly simplifying things to minimize possible disagreement - so just yes or no / up or down instead of some scale like this with room for debate.

This also has potential to encourage phased projects - not necessarily bad just a thought - because long term planning isn’t exactly our strong point so I don’t want to see a bunch of half built projects.

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Not to get into a protracted debate over this but that was set at 60 as a compromise between 2/3 and 50+1. My point is there is a difference between 50+1 (a simple majority) vs. 51 and we should just set it at simple majority instead of having to explain to voters why their thing lost with a majority (50.55%) of the vote.